Jabari's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Jabari initially produced four trucks, but thendecided to increase production to five trucks. The following graph gives the demand curve faced by Jabari's HookNLadder. As the graph shows, in orderto sell the additional fire truck, Jabari must lower the price from $105,000 to $90,000 per truck. Notice that Jabari gains revenue from the sale of theadditional engine, but at the same time, he loses revenue from the initial four engines because they are all sold at the lower price.Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial four engines by selling at $90,000 ratherthan $105,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engineat $90,000.PRICE (Thousands of dollars per fire engine)Jabari165150135120105907560453015D0True1False2Demand+7QUANTITY (Fire engines)8910Revenue LostRevenue GainedIncrease production from 4 to 5 fire engines because the?True or False: If alternatively Jabari's HookNLadder were a competitive firm and $105,000 were the market price for an engine, decreasing its pricefrom $105,000 to $90,000 would result in the same change in the production quantity and, thus, total revenue.dominates in this scenario.

The person is only selling fire engines. The first four engines were manufactured at a lower cost…

Jabari True Increase production from 4 to 5 fire engines because the True or False: If alternatively Jabar's HookNLadder were a competitive firm and $105,000 were the market price for an engine, decreasing its price from $105,000 to $90,000 would result in the same change in the production quantity and, thus, total revenue. False dominates in this scenario.

Jabari True Increase production from 4 to 5 fire engines because the True or False: If alternatively Jabar's HookNLadder were a competitive firm and $105,000 were the market price for an engine, decreasing its price from $105,000 to $90,000 would result in the same change in the production quantity and, thus, total revenue. False dominates in this scenario.

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter8: Monopoly

Section: Chapter Questions

Problem 3SQP

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